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Welcome to News & Events

Published on December 20, 2011, by in Industry News.

Welcome to The Fraud Practice’s FraudBlog; your source for updates on current events, commentary and best practices related to the eCommerce CNP payments and fraud industry.

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Common Pitfalls When Performing Identity Document Verification as a Fraud Prevention Technique

It is common to find risk management teams relying on legacy identity document verification practices, which limits their ability to take advantage of the opportunity to leverage new technology and techniques to verify modern identity documents.  Making use of new identity document features and services can help protect the organization and improve customer retention and conversion.  To help organizations make the most out of using identity document verification The Fraud Practice has compiled a short list of the most common pitfalls merchants that perform identity document verification share.

In reviewing the common pitfalls it is important to keep in mind that in the past decade government issued identity documents (IDs) have evolved, but many systems and implementations for verifying IDs have not; unnecessarily leading to missed fraud and lost sales. Identity document verification can be an effective and often necessary risk management technique for many different types of organizations. Whether your organization manages a homegrown identity document verification solution,  uses a third party service or is currently evaluating options, the focus should be on maintaining good customers and an optimum user experience while detecting and mitigating identity fraud.

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Outsourcing Manual Review Doesn’t Have to be an All-or-Nothing Decision

Many merchants struggle to fully handle risk management and manual reviews in-house, especially with changes in volume and fraud patterns. While many organizations are aware there are third party vendor manual review services available in the market, fewer merchants are aware that when it comes to outsourcing manual review it doesn’t have to be an all-or-nothing decision.

The Fraud Practice provides the following article to discuss circumstances when it may best for an organization to seek third party vendor help with manual reviews and risk management while retaining anywhere from some to most of this responsibility in-house. Depending on the organization and the activity they are experiencing, this could range from light to extensive levels of assistance, and it is important for organizations and risk directors to be informed about all the options available in the market today.

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The 2nd Annual Consumer Authentication Survey from The Fraud Practice and CardinalCommerce is Now Underway

Take the Survey Today and be Entered in up to 10 drawings to win a New Bose SoundLink® Bluetooth® Speaker III

In effort to continue last year’s success and identify the latest trends and experiences from organizations utilizing Consumer Authentication programs, The Fraud Practice and CardinalCommerce are pleased to announce that the 2nd Annual Consumer Authentication Survey is now underway. The survey is open and we will be collecting results over the next five weeks, with two drawings to win a new Bose SoundLink® Bluetooth® Speaker III occurring each week.

You only need to take the survey once and your entry will be entered in up to 10 drawings for a Bose SoundLink® Bluetooth® Speaker III. If you complete the survey and your entry does not win, it will automatically be included in each of the next drawings and is only removed if you are the winner. Be sure to take the survey as soon as possible to be included in as many as all 10 drawings and maximize your chances of winning.

Take the survey now

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Keep Fraud Teams Engaged During the Peak eCommerce Sales Season

As we enter the 4th quarter eCommerce fraud teams are ramping operations to support the holiday rush. The blunt force of added resources stretches management bandwidth and impacts team engagement. Managers can quickly assess their team’s engagement and apply a strategy that will help drive fraud team engagement to peak levels during the 4th quarter.

It is critical for senior management to be prepared with a strategy to keep the fraud team engaged as it grows along with the transaction volumes. Consider several simple tasks managers can focus on today while fraud teams endure the peak sales and fraud attempt season.

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Dairy Queen and at Least 1,000 Other U.S. Businesses Hit by Backoff Malware

According to reports from the U.S. Secret Service and Kaspersky Labs, malware known as Backoff has been used to attack more than 1,000 businesses. This malware targets point-of-sale retail payment systems, intercepting and sending payment information to the fraudsters that employ it. The most recent high profile case of this malware and data compromise targeted nearly 400 Dairy Queen restaurants.

According to Kaspersky Labs senior security researcher Roel Schouwenberg, Backoff is not a particularly advanced or sophisticated malware tool, rather the widespread infections across merchant retail locations exemplifies weak security measures many organizations have in place. Many payment systems compromised by the malware have been for some time as they were infected with a variant traced back to October, 2013.

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Press Release: The Fraud Practice Releases New White Paper and Hosts Webinar on Utilizing Post-Transaction Fraud Prevention in a Risk Solution

Although often overlooked, post-transaction monitoring and reporting are important secondary capabilities that can lead to improvements in a risk management program. Post-transaction procedures often increase the value of existing techniques such as velocity checks, link analysis and other techniques. This enables organizations to utilize these techniques more proactively to better prevent repeat and morphing fraud attacks rather than just containing them.

For all organizations, it is worth taking the time to consider how the use of post-transaction monitoring and reporting tools could augment and improve current risk management practices and strategies. To help organizations better understand these post-transaction techniques, The Fraud Practice has released a free white paper titled “Utilizing Post-Transaction Fraud Prevention in a Risk Solution” which is now available.

Additionally, The Fraud Practice is hosting a webinar on September 30th at 1:00 PM ET including David Montague, President and Lead Consultant of The Fraud Practice, along with Erika Gallo, Director of Global Risk Management for ReD, elaborating on the best practices and considerations for making effective use of post-transaction risk management techniques.

Request your copy of this free white paper

Register for the webinar

View the full Press Release

 
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Card Fraud Costs Asian Banks $400 Million per Year and is Growing Rapidly

According to estimates from FICO, card fraud in Asia costs financial institutions $400 million each year and is increasing by 20 to 25 percent annually. While this number seems very small relative to the tens of billions in card fraud losses worldwide, keep in mind that these are only the losses to issuing banks and card-based payments are much less common in this region.

In a brief BBC interview Dattu Kompella, FICO’s managing director in Asia, discusses the region’s growing middle class and their propensity to shop online. While China and other countries in the region have long been primarily cash-based economies that favor Cash-on-Delivery (CoD) payments for online transactions, the use of payments cards is increasing. However, the use of credit and debit cards is not nearly as common as in Europe and North America.

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CNP Fraud on UK Cards Up 23 Percent in First Half of 2014, Compared to 4 Percent Increase in Counterfeit Card Fraud

The latest figures on card fraud losses in the United Kingdom, coming from industry group Financial Fraud Action UK, support the expectations of most industry experts that when EMV rolls out in the United States it will have a positive impact on deterring counterfeit cards and fraud at the point-of-sale, but lead to more fraud attempts and losses in the Card Not Present channel. In short, CNP fraud is up nearly 25 percent, fraud on contactless card payments is negligible, and a slight increase in counterfeit card fraud is attributed to UK-issued cards being counterfeited and used in nations that have not yet implemented Chip & PIN / EMV.

According to Financial Fraud Action (FFA) UK, an industry group that works in partnership with The UK Cards Association, fraud losses from CNP purchases on UK issued cards in the first six months of 2014 totaled £174.5 million, a 23 percent increase from the first six months of 2013. Excluding mail order and telephone order (MOTO) transactions and focusing on eCommerce, losses between January and June 2014 on UK-issued cards reached £110 million, also a 23 percent increase from the first six months of 2013. Total online shopping increased from 2013 to 2014 over this time period as well, but by only by 16 percent, reaching £47 billion.

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FIS Acquires Clear2Pay, Possibly to Speed Up Development of Payment Network ACH Alternative

FIS Inc. announced the acquisition of Brussels-based payment technology company Clear2Pay for €375 ($493.3) million in early September. While the company announced the investment would bolster global payment capabilities and enhance enterprise payments solutions, the most interesting aspect of the acquisition may be the fact that FIS offers a real-time funds transfer service called PayNet while Clear2Pay has been involved with major payment system shifts such as SEPA (Single Euro Payments Area) and UK Faster Payments. The strategy behind this acquisition may be focused on the further development of a real-time funds transfer network to compete with NACHA.

The PayNet services falls under FIS’ payment network solutions and provides the ability for financial institutions to process instant person-to-person, account-to-account and wire transfers. The service offers real-time funds transfers riding on the EFT (Electronic Funds Transfer) rails that support ATMs and debit cards. They even position the product as a way to expedite bill payments replacing ACH. General Manager of PayNet, Peter Gordon, said there will be 500 banks on the network by the end of this year and by that time all of its banking core systems will be equipped to handle real-time transactions.

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DOJ to Congress: Amend Laws to Help us Prosecute for Overseas Fraud on U.S. Cards

While there have been many successful efforts to bring international fraudsters to justice in U.S. courts, this often requires cooperation from other nations. To make prosecution efforts easier against international fraudsters the U.S. Department of Justice is asking Congress for help, requesting amendments to existing law so that it is illegal to possess, use, buy or sell any stolen credit card that was issued in the United States, regardless of the fraudster’s physical location at the time when the theft or transaction occurs.

The Justice Department says that new or updated laws are needed as there are fraudsters and criminal organizations operating overseas and committing widespread fraud against payment cards issued in the United States. Often because the fraudster is never on U.S. soil, current laws in the way they are written can make prosecution difficult or not possible. Existing laws cover events such as someone abroad hacking into a U.S. computer, stolen cards used or possessed inside the U.S. and money transfers into the United States. However, being in possession of stolen cards outside of the U.S. and using them from outside of the U.S. are not enough for prosecution alone.

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© The Fraud Practice LLC 2012